Fee quotes make for quick decision on county's financial consultant

Aug. 20, 2013

Written by

John Pekas

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This time the shoe was on the other foot.

In June, Minnehaha County Auditor Bob Litz urged the county commission to refinance bonds and to hire Public Financial Management of Minneapolis as the county’s financial consultant. Commissioners balked.

“I am definitely interested in the idea of a financial adviser. But it’s a little too soon to make a decision. This is really something that needs to come up during the budget process,” Commissioner Cindy Heiberger said at the time.

Instead of immediately following Litz’s recommendation to hire PFM, the commission issued requests for proposals from prospective consultants. It reviewed the three proposals Tuesday.

Litz is out of town this week and asked the commission to hold off on a decision until he could meet with them next week, commission administrative officer Ken McFarland said. However, there was such disparity in the bids that the commission saw no compelling reason to delay a decision.

Commissioners unanimously agreed to hire their bond underwriter, Dougherty and Co., to refinance bonds and to serve as financial consultant. Dougherty proposed to do the work for a flat fee of $15,000.

PFM said it would take up to $31,000, and a third bidder, Springsted, from St. Paul, did not include either a refinancing timeline or information on fees in its proposal.

“Is there any reason we’re waiting for Bob to get back to town?” Commissioner Jeff Barth asked.

Heiberger said, “I accept the position of the auditor” but added she had seen all she needed to see in the bids, and she was not going to tear into them in any greater depth in the coming week.

“You could award a proposal today if you felt you need to meet an aggressive timeline,” McFarland told commissioners.

Commissioner John Pekas sounded the only note of reservation about acting before hearing from Litz.

The consultant “is going to work closely with the auditor,” Pekas said. Nonetheless, he also acknowledged the points made by McFarland and other commissioners that timely refinancing would take greatest advantage of favorable interest rates. “Time is the fire in which we burn,” Pekas said. “One bid is double. I think we can easily pull the trigger on this.”

Litz raised commissioners’ eyebrows earlier this year when Dougherty suggested the county could save $900,000 by refinancing its series 2004 general obligation bonds and Litz sought an analysis from PFM, a competiting firm.

PFM predicted a slower rise in interest rates than did Dougherty and said by waiting to refinance, the county could save $2.035 million over eight years. That’s what originally prompted Litz to ask the commission to sign on with PFM.